{"id":495,"date":"2026-05-19T16:48:51","date_gmt":"2026-05-19T16:48:51","guid":{"rendered":"https:\/\/redzine.co.uk\/index.php\/2026\/05\/19\/is-the-gulf-losing-its-grip-on-the-oil-world\/"},"modified":"2026-05-19T16:48:51","modified_gmt":"2026-05-19T16:48:51","slug":"is-the-gulf-losing-its-grip-on-the-oil-world","status":"publish","type":"post","link":"https:\/\/redzine.co.uk\/index.php\/2026\/05\/19\/is-the-gulf-losing-its-grip-on-the-oil-world\/","title":{"rendered":"Is the Gulf losing its grip on the oil world?"},"content":{"rendered":"

One of the most striking features of the Iran war has been the resilience of the global oil market. Despite the disruption of flows through the Strait of Hormuz, the world\u2019s most important oil transit chokepoint, prices have generally hovered around US$100 (\u00a375) per barrel \u2013 a lower level than many observers<\/a> had expected.<\/p>\n

A key reason for this resilience is the growing importance of oil production in the Americas. Even before the war<\/a>, the International Energy Agency predicted<\/a> that virtually all global oil demand growth in 2026 could be met by rising supply from North and South American countries such as the US, Canada, Brazil, Guyana and Argentina.<\/p>\n

At that time, the Opec oil producers\u2019 cartel was also preparing to increase output, raising expectations of a period of oversupply and weak prices. The war changed that picture dramatically. The closure of Hormuz has removed up to 14 million barrels a day from the market, propelling prices higher<\/a> and triggering large global stock draws instead of the expected stock builds.<\/p>\n

Yet high prices are often the best cure for shortages. Oil producers across the Americas have responded to the disruption by increasing output and exports. In the US, crude exports rose to a record 6.44 million barrels a day in April. It is also adding new export infrastructure, with nearly 800,000 barrels a day of additional dock capacity<\/a> due to come online in 2026.<\/p>\n

Meanwhile, Brazil has added eight new offshore floating oil production vessels in recent years, with a combined capacity approaching 1.5 million barrels a day. Its oil production is also expected to rise sharply again in 2026. <\/p>\n

Petrobras, Brazil\u2019s state oil company, recently started a new production project<\/a> at one of these vessels in the B\u00fazios field off the coast of Rio de Janeiro. Production began five months ahead of schedule, partly to take advantage of elevated global prices.<\/p>\n

Elsewhere in South America, Guyana has emerged as one of the world\u2019s fastest-growing oil producers. Guyanese oil output has already reached around 900,000 barrels a day and could almost double<\/a> by the end of the decade. Even Venezuela, long associated with declining oil production and economic crisis, has substantially increased exports<\/a> in response to higher prices.<\/p>\n

Taken together, the Americas are expected to produce around 30 million barrels of oil per day later in 2026, approaching pre-war Opec production levels. The US alone remains the world\u2019s largest producer, with its total production of liquid hydrocarbons reaching almost 22 million barrels<\/a> a day in April.<\/p>\n

\n \"A
\n A US oil tanker off the coast of Alaska.<\/span>
\n Natalia Bratslavsky \/ Shutterstock<\/a><\/span>
\n <\/figcaption><\/figure>\n

Opec helped create this boom<\/h2>\n

This rise in western hemispheric production did not happen in isolation. Ironically, it was helped by Opec itself. For years, Opec\u2019s de facto leader Saudi Arabia and its partners restricted oil output to support higher prices. Those elevated prices helped make more expensive projects in the Americas commercially viable, especially US shale production. <\/p>\n

Saudi Arabia\u2019s strategy of \u201chigher for longer\u201d prices was partly driven by domestic economic ambitions. To finance projects linked to its economic diversification plans, including the vast new Neom city development, the Saudis need oil prices<\/a> of at least US$90 a barrel. The result has been a powerful incentive for producers outside Opec to expand.<\/p>\n

Yet, despite this momentum, declaring a permanent shift in oil\u2019s centre of gravity away from the Middle East would be premature. The economics of production still strongly favour<\/a> Gulf producers, with oil extraction costs in the Persian Gulf remaining among the lowest in the world. <\/p>\n

In some fields, Saudi Arabia and neighbouring producers can extract oil<\/a> for less than US$10 a barrel. Across the Gulf region more broadly, average production costs are estimated at roughly US$27 a barrel. By contrast, much of North American shale production requires prices closer<\/a> to between US$50 and US$65 a barrel to remain profitable. <\/p>\n

That difference matters enormously during periods of lower prices. If markets weaken again, higher-cost producers in the Americas would come under pressure first. Gulf producers, with vast reserves and extremely low costs, would probably be able to outlast them.<\/p>\n

Geography also favours the Middle East in many key markets. For growing Asian economies such as India, Pakistan and Bangladesh, importing oil from the nearby Gulf remains the cheapest option. <\/p>\n

Many Asian refineries were designed specifically to process Middle Eastern crude grades, which are rich in middle distillates such as diesel and jet fuel \u2013 the hydrocarbons that typically drive economic development. Much of the shale oil exported from the US is lighter and less suitable as a direct replacement.<\/p>\n

\n \"A<\/a>
\n Saudi Arabia and the United Arab Emirates have both invested heavily in infrastructure to bypass the Strait of Hormuz.<\/span>
\n Peter Hermes Furian \/ Shutterstock<\/a><\/span>
\n <\/figcaption><\/figure>\n

At the same time, Gulf producers are investing heavily<\/a> to protect their long-term role in global energy markets. The United Arab Emirates is expanding pipeline infrastructure<\/a> that bypasses the Strait of Hormuz, including upgrading its Habshan-Fujairah pipeline. <\/p>\n

And Saudi Arabia already operates its vast East-West Pipeline, which is capable of transporting 7 million barrels per day of oil to the Red Sea. These projects are designed to reduce vulnerability to regional instability and secure export routes for decades to come.<\/p>\n

The Americas are unquestionably transforming the global oil market. The region is now effectively what is known as a swing producer, providing some flexibility during supply crises and geopolitical shocks. <\/p>\n

But long-term dominance in oil markets is determined not only by production volumes. Cost, geography, infrastructure and reserve size matter too. On those measures, the Middle East still holds a formidable advantage.<\/p>\n

For as long as the world continues to consume large volumes of oil, the Gulf is likely to remain the industry\u2019s core production and export hub \u2013 even if the Americas are becoming an increasingly important source of crude oil.<\/p>\n

\"The<\/p>\n

Adi Imsirovic does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

One of the most striking features of the Iran war has been the resilience of the global oil market. Despite the disruption of flows through the Strait of Hormuz, the world\u2019s most important oil transit chokepoint, prices have generally hovered around US$100 (\u00a375) per barrel \u2013 a lower level than many observers had expected. A […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-495","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=495"}],"version-history":[{"count":0,"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/495\/revisions"}],"wp:attachment":[{"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/redzine.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}